LETTERS OF CREDIT CAN BE DIVIDED INTO:
By choosing a letter of credit as a form of payment you are easily able to multitask: make trade relations transparent and safe, develop business and constantly increase profits all at once.
having the bank as a third party. In this case, the bank acts as a guarantor of the contract payment, regardless of the actions of the issuing bank. It acts as the additional insurance of the transaction.
Confirmed letters of credit mean
when the bank notifies the exporter of the L/C issuing, and the payment is made only after the importer transfers the required amount.
Unconfirmed letters of credit occur
the type of letters, at the establishment of which the issuing bank is obliged to transfer the amount of L/C at the expense of the payer or the loan granted to him to the account of the performing bank for the entire term of the obligations.
Covered letters of credit are
those, at the establishment of which the executing bank is given the right to debit the entire amount of the L/C from the current account of the issuing bank.
Non-covered letters of credit are
the full amount of the transaction, but only the executed part, i.e. the funds are transferred to the account according to their expenditure. It is highly advantageous when conducting regular transactions.
Revolving L/Cs don't cover
L/Cs, that are paid in case of buyer's failure to pay for the shipped goods. This is one of the types of bank-issued guarantees used in international trade.
Stand-by letters of credit are